Teck is increasing the use of solar energy at its Quebrada Blanca Phase 2 project in Chile
Both its metals and fossil fuel operations have seen prices spike lately
The stock: Investors are on the fence about B.C.’s, indeed Canada’s, largest diversified mining company, Teck Resources (TSX:TECK.A, TECK.B; NYSE:TECK). On the one hand, it’s a bad, old fossil fuel producer, accounting for most of the country’s metallurgical coal production and part-owner of the Fort Hills oilsands mine in Alberta. On the other, it’s a major producer of copper, that blessed metal so needed to wire tomorrow’s fleet of emission-free electric vehicles.
The drivers: The thing is, lately Teck has been having it both ways. Not only is it benefiting from the skyrocketing price of copper, but prices for coking coal have been on a bit of a run as well. Demand from steelmakers is steady, and there’s no new supply coming on the market anytime soon.
Teck is also expected to boost copper output starting late next year with the expansion of its Quebrada Blanca mine in Chile. At $28.74 last time we looked, Teck’s Class B shares are up 18.5 percent year-to-date. They pay a modest dividend of 20 cents a year, for a yield of 0.7 percent.
And for the record, the company takes climate change seriously. In 2020, it withdrew its application for a second, wholly owned oilsands project, the Frontier Mine, citing a lack of regulatory clarity going forward. The same year, it acquired the City of Kimberley’s debt stake in the SunMine solar generating station, on the site of its retired Sullivan Mine. CEO Don Lindsay explained that the company planned to use SunMine to develop expertise in solar power and renewable energy development.
Word on the street: Last week BofA Securities analyst Timna Tanners raised her rating on Teck from hold to buy, with a $37 target. “While reducing carbon emissions has become a priority especially in Europe and China, hurting longer-term demand prospects for metallurgical coal, we think these transitions will take time,” she noted.
Coming and going: West Fraser Timber (TSX, NYSE:WFG) made so much money during lumber’s spring spike that the company, profiled here in March, has decided to buy back $1 billion worth of its own shares in a modified Dutch auction from July 12 to August 17. Share buybacks are seen as a way of returning cash to shareholders as the stock in circulation falls and earnings per share typically rise, leading to a higher price.